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Roberto Cavalli to cut 200 jobs and close stores, while its Creative Director departs

Oct 12, 2016

Roberto Cavalli SpA announced today the departure of its Creative Director Peter Dundas are parting ways. Dundas’ last collection was for spring 2017, presented in September in Milan.

Later on Wednesday, the company revealed a drastic reorganization with the goal to return to operating profitability in 2018. Following a meeting with the unions, the firm said it will cut about 200 positions out of a total global headcount of 672.

With the goal to streamline its company structure, Roberto Cavalli will close its Milan corporate and design offices and transfer all functions to Osmannoro, Florence. Production and logistics will be rationalized and a number of stores will be closed or relocated.

“The fashion industry is facing uniquely challenging times, with changing consumer demands, significant contraction in various key markets, and fundamental transformation in the industry’s dynamics,” said chief executive officer Gian Giacomo Ferraris. “In this environment, only iconic brands with a coherent business model and an efficient organization can survive. After my initial examination of the company I believe the Cavalli brand has what it takes to succeed. But the reality is that the company’s costs must be in line with its revenues and that is the task we now have to embark upon.”

Chief executive officer Gian Giacomo Ferraris explained that “a company of this size cannot have two separate entities in Milan and Florence,” and that he was looking to optimize synergies. The vertical cuts will touch managers as well as employees in design and product development. “We must have focused collections and close stores in provincial cities or that are under-performing,” said Ferraris, citing units in Venice, Vienna and Madrid as examples.

Ferraris waved away the need to specifically have offices in Milan. “The world is changing, it’s an outdated and provincial concept. We must reunite and restructure the company, make it more compact. I myself need to stay in contact with the workers and avoid feuds, miscommunication and inefficiencies. The situation could not go on this way. The company was unbalanced, there were more operating costs than sales.”

Ferraris said that he expected sales in 2016 to amount between 155 million and 160 million euros, or $172 million and $177 million at current exchange. The executive underscored that the company had no debt.

The pipeline at the manufacturing plant in Osmannoro ranges from stocking fabrics to design and the development of prototypes, samples and products.

Rumors about potential cuts at Cavalli have been circulating for months. In November 2015, more than 200 workers of the Roberto Cavalli factory in Sesto Fiorentino, in Tuscany, walked the streets of Florence to protest against Clessidra’s decision to open a mobility procedure for 66 employees.

Ferraris, a former Jil Sander and Gucci executive, succeeded Giancarlo Di Risio at Versace in 2009 and launched an extensive reorganization plan aimed at returning the company to profitability in 2011.

Regarding Dundas’ departure, Ferraris said, “On behalf of Roberto Cavalli and our shareholders, we thank Peter Dundas for his contribution to the brand, and we wish him well for his future. As Roberto Cavalli goes through a period of transformation, the design team will carry on and the appointment of a new creative director will be made in due course.”

Without providing additional details about Dundas’ exit, asked about a potential successor, Ferraris said it was not “an immediate” issue, but that he believed the brand needs a creative director. “This is a fashion company with a very clear DNA. We may go with a top designer along the model of Karl Lagerfeld for Fendi or promote an in-house designer like at Valentino or Gucci, but it may not be before September 2017.”

He also said that Cavalli the designer ”is a shareholder, has the role of an ambassador, there is respect for him as the founder and a point of reference,” but that he is not more actively involved in the company now.

“I want to thank Roberto Cavalli and the Group for this valuable experience and I wish them the best in their future endeavors,” said Dundas. “I am especially grateful to the ateliers and the teams who participated in this adventure.”

Dundas was appointed creative director of the Florence-based company in March 2015. The Norwegian designer had been the artistic director of Emilio Pucci, also based in Florence, since 2008. It was a homecoming for Dundas, who had worked with founder Roberto Cavalli and his wife Eva as head designer from 2002 to 2005.

Dundas’ first collection for Cavalli bowed in Milan in September 2015 for spring 2016 but received mixed reviews as the designer wanted to break with the past by injecting elements of youth, street savvy and touches of the Eighties. In his next collections, Dundas went back to his comfort zone, presenting rich and opulent designs with bohemian airs.

The Cavalli brand has been going through a phase of changes. Italian private equity fund Clessidra bought 90 percent of the company at the end of April 2015, shortly after Dundas’ arrival. The founding designer retained a 10 percent stake, but has eased out of the fashion industry and never attended a show for the brand. At the end of July this year, Roberto Cavalli SpA appointed Ferraris as its new chief executive officer, succeeding Renato Semerari, who left over strategic differences. Ferraris was previously Versace’s ceo. Francesco Trapani, former president of the company, had tapped Semerari at the time of the acquisition of Cavalli.

Last year was one of transition for the Cavalli group. In the 12 months ended Dec. 31, net profit totaled 32.7 million euros, or $36.3 million. This compares with a loss of 9.7 million euros, or $13 million, in 2014. The sale of the building housing the brand’s flagship in Paris’ Rue Saint-Honoré helped lift the company’s profits, as well as its net financial position. The company is renting the space where the store continues to stand.

In 2015, revenues were down 14.2 percent to 179.7 million euros, or $199.4 million, compared with 2014. The company attributed the drop mainly to a decrease in orders predating Clessidra’s acquisition and to the challenges in luxury markets, especially Russia, where the Cavalli brand has been historically strong, as well as a contraction in sales derived from licenses. Dollar figures were converted from the euro at average exchange rates for the periods in question.

In addition to the signature brand, the group includes the young casual Just Cavalli, the bridge line Cavalli Class, the Roberto Cavalli junior line and a home collection and a hospitality sector through its network of Cavalli Clubs and Cavalli Cafés, in cities ranging from Miami to Dubai.
Cavalli’s network of stores last year totaled 182.